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A street named Article 123 sits in the historic centre of Mexico City, honouring a venerated clause in the constitution that enshrined workers’ rights a century ago. Written during a bloody revolution, a central pillar of the text was the 8-hour shift, with one rest day, and a maximum of 48 hours a week.
Lawmakers from the leftist ruling party Morena now want to lower the limit to 40 hours, following changes recently in Chile and Colombia to similar levels. Mexicans work some of the longest hours in the OECD. About 15mn people are at work for more than 48 hours a week, statistics from government agency INEGI show. It’s not unusual for office employees to be at their desks late and in factories most put in long shifts or Saturdays.
“Us Mexicans work a lot,” Juan Contreras, a 48-year-old parking attendant who works 60 hours a week said. “It’s our culture from our parents, grandparents that worked in the fields . . . long days with very little pay.”
The private sector is pushing back against the proposed reduction though, warning it would mean sharply higher costs, exacerbate growing labour shortages, and increase the proportion of workers in the informal sector.
The debate is happening after several years of notable improvements for formal workers under leftist President Andrés Manuel López Obrador, something even many of his critics acknowledge. The minimum wage — set by a decentralised commission — has more than doubled, and a longstanding practice of outsourcing workers to avoid paying benefits was clamped down on. Union contracts, which often protected companies rather than workers, now have to be put to democratic votes.
At the same time unemployment is less than 3 per cent and average daily wages in the formal sector have risen almost 20 per cent in the past five years in real terms. But business leaders says the proposal to cut regular working hours would mean companies have to find cover for 105mn extra hours a week, likely with 2.6mn workers at a cost of 360bn pesos ($20.4bn).
“The big impact of the initiatives to reduce the work week across all sectors wouldn’t generate higher productivity, or more time off for workers . . . it would increase labour costs,” said Lorenzo Roel Hernández, chair of the labour commission at CCE, estimating labour costs would rise between 25-40 per cent for different companies.
Investors are increasingly positive about Mexico as a place to shore up supply chains tested by the US-China trade war and broader geopolitical tensions. More than costs, there are concerns over the scarcity of labour in some parts of the country. The proposal on the table is a five-day work week, with a maximum 8-hour day with immediate effect. It requires a constitutional change, meaning Morena needs some opposition votes to reach the required two-thirds majority.
“We’re not against reducing the work week . . . we need to gradually implement the reduction,” said Pedro Casas Alatriste, director of the American Chamber of Commerce of Mexico.
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Existing labour reform efforts have focused on the formal economy. But more than half of Mexico’s workers are in the informal sector, which means they are more vulnerable to abusive conditions and their employers are likely to stay smaller and less productive than their formal competitors.
“It’s very contradictory — the guys at the bottom of the wage distribution are not being helped by this, and they are potentially being hurt because it’ll even make it more difficult for them to eventually get a formal job,” Santiago Levy, senior fellow at Brookings Institution in Washington, said.
In almost two decades since 2005, the proportion of informal workers has only fallen from 59 per cent to 55 per cent, according to INEGI. Few politicians have been willing to take difficult steps to reduce this further, such as by building a unified healthcare system or undertaking ambitious tax reform.
López Obrador hasn’t made any public statement on the proposal to limit hours, and the discussion to limit hours could pass into next year, when Mexico holds elections.
“We intend to pass it this year but being realistic it’s a little bit difficult,” said Napoleón Gómez, Senator for Morena and mining union leader. “The discussions are probably going to be long and heated.”
christine.murray@ft.com
Source: Economy - ft.com
